This issue contains the Doomsday Squad story "The Peace Keepers" and the Usagi Yojimbo story "The Village of Fear". This issue also contains a single page story introducing Usagi and the basics of Bushido. The Village of Fear was the very first Usagi Yojimbo story to be printed in color, and was the first time Tom Luth worked on Usagi. His partnership with Stan Sakai on Usagi continues to this day.
The Village of Fear was first reprinted in color in the Usagi Yojimbo Color Special #1, and again in black and white (with minor art changes) in Usagi Yojimbo TPB #1. The Doomsday Squad story has not been reprinted.
Plot of "The Village of Fear"
The wandering samurai is minding his own business playing his flute when he encounters a giant cat-like beast feasting on the carcases of Tokage (lizard creatures that inhabit Usagi's world). The beast attacks Usagi, but vanishes. If not for the blood on his sword, he would have thought the encounter a Kitsune trick.
A short time later, Usagi enters a village. On the outskirts, he encounters a man making statues of the dead, and muttering to himself. The village is in disrepair, and has a feeling of fear. Usagi tries to rally the villagers to hire him to hunt the beast and free them from their fear, but everyone runs away and hides. Except one, a young woman who introduces herself as Ocho. She takes Usagi in as a guest and serves him rice. Usagi notices her hand is injured. She tells Usagi of the beast's reign of terror, and how all who've gone to hunt it have died. Almost two dozen men have perished in the attempt. The only survivor was Gon, who was driven mad with fear. In a show of bravery, Usagi partially draws his sword. Reflected in his blade he sees Ocho's reflection, it is that of the beast!
Realizing Ocho is a shape shifter and the beast herself, Usagi follows her and confronts her beast form in the snow. The two fight, and she injures Usagi. Gon jumps into the battle armed with a naginata (a spear), piercing the beast through the neck. Unfortunately for Gon, this does not kill Ocho, and she dispatches Gon with her sharp teeth. As Gon dies, Usagi strikes a mortal blow, freeing the village.
The next morning, Usagi call the village to honor their fallen hero, placing a new statue among the others saying "You died well, Gon, now your spirit flies with the wind." Not sure of what he said, the villagers question each other ... one quips "Something about 'Gon with the wind.'"